Horacio R. Marquez
Buy, Sell or Hold: Exelon Corp. (NYSE: EXC) Can Energize Your Portfolio with a High-Powered Dividend
With the yield on U.S. Treasury bonds sitting well below 3%, income investors have to get creative. Those seeking dividend-based cash flow must to be willing to look in less traditional places to find a safe yield. And what could be less traditional than nuclear power?
After the Three Mile Island disaster of 1979, nuclear energy became the forgotten carbon-free source of electricity. However, a small renaissance in nuclear power is happening as we speak, and Exelon Corp. (NYSE: EXC) gives us a great tool to capture the upside from this renaissance – with some solid income, to boot.
Exelon is the largest operator of nuclear power plants in the United States, with 10 plants operating a total of 17 individual reactors. It's the third-largest operator of nuclear plants in the world, and it has a massive barrier to entry around its niche market.
Buy, Sell or Hold: BCE Inc. (NYSE: BCE) Has Canada Covered
The market right now is torn between data that suggests the U.S. is waning and reports that many companies are increasing guidance and beating earnings estimates.
This has created a lot of volatility, and if you already have enough strong growth plays in your portfolio, adding some large, established companies with stable cashflows and hefty dividend yields could ease some of the anxiety you may be feeling.
Such an approach in my opinion is superior to bonds, since bond yields are just too low at these levels. That means you actually risk capital losses if they go up. In addition, safe dividends paid by leading companies are higher than bond yields. And unlike bonds, big companies usually can adjust prices in accordance with inflation.
There are a lot of companies for an investor to choose from, but BCE Inc. (NYSE: BCE) jumps out at me immediately. It is a dominant, well-managed company, and it has strong upside potential.
Buy, Sell or Hold: Tata Motors Ltd. (NYSE: TTM) Is Kicking Into High Gear
I am constantly hunting for profitable opportunities for my Money Map VIP Trader, the Money Map Report and this column in Money Morning. And I realized months ago that India would be the one major emerging market that would notably accelerate in the second half of the year and into 2011.
To take advantage of that trend, I recommended a very pro-cyclical play in my trading service, which you can only see by subscribing. But I also kept up my search and was able to find another good opportunity to recommend here. That opportunity is Tata Motors Ltd. (NYSE ADR: TTM).
About a month ago, my colleague and Money Morning Managing Editor Jason Simpkins articulated a view of the Indian economy that clearly details how that country is looking to accelerate growth. The major headwind for India has been inflation – more specifically, food prices.
However, India is experiencing a normal monsoon season and will soon see its production of food increase and food prices drop – the recent spike in wheat prices notwithstanding. This drop in food prices, coupled with renewed fiscal discipline will help bring inflation down from around 10% to about 6% by year end.
Buy, Sell or Hold: The Clorox Co. (NYSE:CLX) Is Cleaning Up
The Clorox Co. (NYSE:CLX) on Thursday reported net earnings of $171 million on sales of $1.52 billion for the fourth quarter of fiscal year 2010 ended June 30, compared to net earnings of $170 million on net sales of $1.5 billion the year prior.
This continued the company's trend of improvement. But more importantly, the bulk of Clorox's profit and margin growth came from its international unit, and the firm projected an expansion in earnings per share of at least 10% to 14% for next fiscal year.
Boring is beautiful when you're dealing with consumer staples, since share prices improve with incremental increases in sales and margins. In Clorox's case, this has meant taking advantage of low rates and dependable cashflow to finance expansion plans. But the good news is that the high financial leverage results in an exorbitant return on equity.
Buy, Sell or Hold: Peabody Energy Corp.'s (NYSE: BTU) Global Dominance Is Heating Up Profit Growth
While advanced economies are still facing high levels of unemployment, more than a billion people in emerging markets are experiencing advancing standards of living.
As these emerging economies – especially China and India -grow, there is a strong trend toward urbanization. People are leaving the countryside for the cities in droves in order to reap the promise of the global economy. This secular process alone places huge demands on the existing infrastructure.
This growth is also boosting manufacturing and energy needs. China has surpassed the United States in both car production and energy consumption. And India's Tata Motors Ltd. (NYSE ADR: TTM) launched the cheapest car in the world, the Nano, which costs roughly $2,500. The critically acclaimed vehicle's mass appeal and affordability is creating additional congestion on India's famously overcrowded streets. Adding more fuel to the global-demand fire, most emerging economies implemented a strong dose of infrastructure spending within their budgets as a result of the global financial crisis of 2008.
The result of all that infrastructure development, urbanization and increased consumer affluence is a myriad of new road, bridge and building construction, additional urban development, and stepped-up production of cars, home appliances and other consumer goods. All of these developments require two key ingredients to become reality: Steel and energy.
Buy, Sell or Hold: United Technologies Corp. (NYSE:UTX) is Really Taking Off
We have already seen strength in industrial sales in many companies, but today's recommendation may be the most promising yet. United Technologies Corp. (NYSE:UTX) is hitting on all cylinders and is poised for both long and short-term gains.
The company reported earnings and hit it out of the ballpark. UTC reported quarterly earnings of $1.20 per share – even including the loss of 12 cents a share due to restructuring charges. That's 4 cents higher than analysts had expected – 16 cents higher, if you take out the one-time restructuring charges.
The good news did not stop there, either. UTC raised its guidance and share repurchases for the year, despite new challenges in Europe. Sales beat expectations and profit margins were higher across the board. Engine maker Pratt & Whitney and international elevator brand Otis were especially strong. That's remarkable considering the market's fear of a double-dip recession and the U.S. Federal Reserve's "uncertain" status about the strength of the economy.
Buy, Sell or Hold: Siemens AG (NYSE: SI) Will Benefit from Germany's Strength and the Euro's Weakness
The euro has suffered from the Greek debt crisis, and Spain and Portugal also are under closer scrutiny. But there are still significant opportunities for profit in the Eurozone.
Germany, for example, has the lowest debt to gross domestic product (GDP) ratio of all the major advanced industrial economies. And right now, it is taking measures to bring its budget deficit quickly into line. Despite a very rigid labor system, Germany is the second-largest exporter in the world, right after China. And the recent euro sell-off has given an extra "subsidy" of some 25% to German exporters.
This "subsidy" is likely to last for quite a while, since the structural situations of weaker European Union (EU) member countries will take time to resolve. It goes way beyond just having European banks pass some stress tests. So we are going to take advantage of a prudently managed exporting powerhouse with Siemens AG (NYSE ADR: SI).
Siemens is a conservatively run firm. It has very low levels of debt, which is rated in the middle of the investment grade scale (A). And despite the weakness in Europe, it has managed to increase its bottom line by 50% from last year's levels.
Buy, Sell or Hold: Even After a Near-30% Gain Campbell Soup Co. (NYSE: CPB) Still Has Room to Run
I first recommended Campbell Soup Co. (NYSE: CPB) on June 1, 2009. At the time of our recommendation, our price target was a minimum of $32. The stock is now trading just above $35 today – a 27% increase.
What's more is that Campbell, which boasts a strong brand and above-average international sales potential, is poised to keep its winning streak intact.
The market sometimes offers us compelling propositions, like it did last year, when the stock inexplicably sold off. We took ready advantage of the situation. Campbell Soup has a very large, stable and increasing cashflow. It is so stable that it is almost boring. In fact, this company's stability qualifies it more as a dividend play than anything else.
In the two consecutive quarters following our initial recommendation, Campbell Soup torched estimates, as analysts on Wall Street had not caught on to our emerging markets growth story. The Street caught on in the last quarter but still has not fully recognized this company's potential.